It’s Time to Scrap Certificate-of-Need Rules

When the state sold the Dorothea Dix property to the city of Raleigh for $52 million last year, part of the deal was that proceeds from the sale would be used for mental health services. There is general agreement that North Carolina has a mental health crisis, and doing something about it has been a priority throughout the 2016 state budget process.

The governor set aside $20 million from the proceeds of the Dix property sale for mental health initiatives. The N.C. House proposes spending $25 million to construct and convert mental health beds in rural hospitals as a three-year pilot program. The Senate allocates $12 million for construction or conversion of inpatient behavioral health beds.

In addition, both the House and Senate budget $2 million for two new crisis centers for children and adolescents in high-need parts of the state. All of these initiatives stem from proceeds of the sale of the Dorothea Dix property.

So everyone agrees there is a need. It’s clearly recognized as a high priority. The money is there to do it. State leaders are committed to moving forward. What’s the problem?

North Carolina’s prohibitive and monopolistic certificate-of-need law. None of these beds can be constructed or converted to mental health services without first getting a certificate of need, a permission slip from the government. The process can take anywhere from months to years and cost thousands of dollars.

It’s complicated, and the paperwork alone can be overwhelming. Even with the go-ahead from the N.C. Department of Health and Human Services, a hospital can veto the application.

The House recognizes this impediment and included in its budget a waiver for the selected rural hospital: “[E]ach selected rural hospital shall be allowed to construct new, or convert unused acute care beds into, licensed, inpatient psychiatric or substance abuse beds without undergoing certificate of need review. …”

So again, we have a mental health crisis in North Carolina. We have the money, the will, the commitment to address the crisis. But there is a brick wall prohibiting getting those mental health services to those who need it: certificate of need.

The one sentence in the House budget removes the CON barrier for the first step in providing mental health facilities. But what about the next step? What about facilities for orthopedics? For long-term care? For MRI and CAT scan machines? For neonatal intensive care units? Kidney dialysis units? All require a certificate of need.

Sen. Ralph Hise, R-Mitchell, has introduced a bill in the Senate (to replace House Bill 161) that would repeal state certificate-of-need requirements in 2021. Sooner would be even better. The sooner medical care can be unbound by the restrictions of the certificate-of-need process, the sooner care can be available and delivered to those who need it.

Fourteen states have repealed their certificate-of-need laws. Maybe North Carolina will wake-up and join them soon.

Becki Gray (@BeckiGray) is vice president for outreach at the John Locke Foundation.